Where did all the houses go? The latest data from realestate.co.nz shows nationally a total of 14,883 houses were listed for sale last month, a drop of 29.9% on the same time last year. Asking prices are cooling off too. Across the country the average asking price has cooled in May to $841,193, down by $22,203 from the March average of $863,396. Demand for rentals is high and increasing alongside this downward trend, and many renters are reporting relentless rises in rents. Vanessa Williams, realestate.co.nz spokesperson says, “There are simply not enough houses for sale to ease the supply shortage,”
So where did all the houses go? The Labour government may not have delivered on their KiwiBuild promise yet but it seems Kiwis are rolling up their sleeves and getting it done anyway. More New Zealanders are choosing to build with construction booming and the number of residential building consents issued continuing to break records. In the 12 months to the end of April, 42,848 new homes were consented, up 15.2% on the previous 12 months.
Westpac economist Satish Ranchhod says 18,000 of these homes are in Auckland. Waikato, Hawke’s Bay, Wellington, Whanganui/Manawatū and Canterbury are also experiencing strong growth with high levels of consent issued. Shortages of labour and building materials are the only opposition the experts can see to this upward trend. Carter’s halt to wood supply for retail giants Mitre 10 and ITM was an early sign of this system under stress but has perhaps only opened up opportunities for smaller suppliers to step up and fill the gap.
Demand for new build properties is tipped to only increase further with the Government’s confirmation that they will be exempt from its new tax rules for property investors but Deloitte NZ tax partner Robyn Walker said there was still a question mark around whether subsequent owners would also be exempt from the interest deductibility changes and how long the new build exemption might last. The advice is to tread carefully and take your time understanding how the proposals can impact you.
Walker said the proposed definition of a new build was relatively wide and was not just a brand-new townhouse on vacant land. New builds would also include a house added to a property, whether stand-alone or attached, a house replacing an existing house, one house renovated to create two houses, and commercial properties converted into apartments. Additionally, if a house was added to vacant land, it would not have to be new or constructed on-site to qualify as a new build. That meant modular or relocated houses would qualify. With changes to building consent laws now meaning consent is no longer required for smaller builds up to 30m2, these numbers may just be the tip of the iceberg.
We may be experiencing a shortage of supply right now but Westpac economist Ranchhod says with the borders still closed, building levels are now well above what’s needed to keep up with population growth. Where did all the houses go? The good news is we’re getting there.